Boyd Stock Soars As Margin Expansion Seems Permanent


Posted: July 28, 2021, 10:11 a.m.

Last update on: July 28, 2021, 02:10 p.m.

Boyd Gaming (NYSE: BYD) stock is trading higher on Wednesday. This was after the casino operator dropped cover of the profit ball, reporting second quarter earnings per share (EPS) and revenue that far exceeded Wall Street estimates.

Stock Boyd
Boyd Gaming’s Sam’s Town Las Vegas neon sign lights up the night sky. The company crushed second quarter earnings and analysts see more potential. (Picture: Fox5 Vegas)

The Sam’s Town operator earned $ 1 per share on sales of $ 893.6 million from April to June. Analysts had expected a profit of 95 cents on revenue of $ 808.74 million. Like other operators focusing on local and regional Las Vegas markets, Boyd is benefiting from expanding margins during the coronavirus pandemic. But market watchers are wondering how sustainable this trend is. Steven analyst Steven Wieczynski says this could be permanent in Boyd’s case.

We believe that much of the cost savings that were realized during COVID-19 should prove to be permanent, even as some ‘margin dilutive’ revenue comes back online, ” the analyst said in a note to clients.

By raising “materially” from 2021 to 2023 earnings before interest, taxes, depreciation, amortization and restructuring or rent costs (EBITDAR) on Boyd, Wieczynski reiterates a “buy” rating on the stock, while increasing his price target to $ 88 from $ 82. This implies an increase of over 54% from the July 27 close.

Boyd Stock Can Handle Delta Headwinds

Like other gaming stocks, Boyd has struggled in recent weeks as investors walked away from casino operators due to the emergence of the delta variant of the coronavirus.

However, the operator of Orleans has its supporters, some calling it a top mid-cap idea. While mask warrants and travel warnings are back, there is no open discussion yet on another round of arcade closures. As Stifel’s Wieczynski notes, even if this storm does come, Boyd has the resources to weather it.

“While BYD shares may trade sideways around the new variants for the foreseeable future, we remind investors that even if some gaming markets were forced to shut down or downsize again, BYD’s balance sheet remains under pressure. excellent shape and we believe that demand would return. very quickly once the fears of variations subside, similar to what we’ve seen in the last ten months, ”he said.

The management commentary says Boyd, who operates 28 gaming sites in 10 states, including 11 in his hometown of Las Vegas, is off to a good start in the third quarter. This is with little change in customer spending and visitation trends in the context of the delta variant.

FanDuel, iGaming Drivers

While Boyd is often seen as a land-based casino operator, the larger investment thesis includes a growing online casino business and a five percent stake in sports betting giant FanDuel – characteristics that are often neglected with this stock.

Based on our strong performance so far this year, we remain firmly on track to generate over $ 20 million in EBITDAR through sports betting and interactive games this year, ” Boyd CEO Keith Smith said on a conference call.

Stifel’s Wieczynski said Boyd’s stake in FanDuel could potentially be worth much more than what is currently reflected in the share price if iGaming and sports betting surprises on the upside in terms of growth.



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